Assume the following information:
If the two countries specialize in the production of that commodity in which they have a comparative advantage, and trade their surplus at a price of 1.5 bushels of grain for one bolt of cloth, how many bushels of grain and bolts of cloth will be consumed by Country B? Assume that the increase in cloth output will be shared equally by both countries.
A) 2,500 bushels of grain and 1,300 bolts of cloth
B) 2,550 bushels of grain and 1,300 bolts of cloth
C) 2,550 bushels of grain and 1,400 bolts of cloth
D) 2,600 bushels of grain and 1,400 bolts of cloth
E) None of the above.
Correct Answer:
Verified
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